CG Technology to pay record $5.5 million settlement for illegal bets complaint

CG Technology, the gambling subsidiary of Wall Street firm Cantor Fitzgerald LP, will pay the largest fine in Nevada history to settle an 18-count complaint that the company or its CEO should have known one of its top executives was accepting illegal bets.

The Las Vegas-based bookmaker will pay a record $5.5 million fine under an agreement reached with the Nevada Gaming Control Board, according to the stipulated settlement released late Monday.

The settlement addresses allegations against CG Technology, formerly known as Cantor Gaming, in a civil complaint filed Jan. 6 before the Nevada Gaming Commission. The five-member commission will consider the settlement at a hearing to be scheduled.

Both CG Technology CEO Lee Amaitis and Cantor Fitzgerald Chairman Howard Lutnick signed off on the settlement.

The 18-count complaint said the sports betting company or Amaitis knew or should have known that Michael Colbert, its former director of risk management and vice president, was accepting illegal wagers and was acting as an agent to recruit bettors.

Colbert pleaded guilty in New York federal court in August to a single felony charge of conspiracy in connection with his participation in a nationwide illegal bookmaking ring. His sentencing is pending.

Nevada gaming regulators never alleged that Amaitis engaged in specific illegal actions himself. Colbert conducted his “illegal gambling activities” through the use of his position, the complaint said.

Regulators accused the company of failing to supervise an employee sufficiently to prevent criminal activity violating Nevada gaming regulations.

In the six-page settlement, CG Technology neither admitted nor denied the complaint’s first four allegations but agreed the control board “could prove by a preponderance of the evidence” that the former Cantor Gaming might have been found guilty at a hearing.

Gaming Control Board Chairman A.G. Burnett called the agency’s action to hand down the largest fine in state history “a severe punishment.”

“Public trust can only be maintained by strict regulation of gaming,” Burnett said. “Violations of the type alleged in the complaint must have significant disciplinary consequences.”

A CG Technology spokeswoman expressed her company’s satisfaction with the settlement.

“We are glad we have reached a resolution and are pleased to put this behind us,” spokeswoman Hannah Sloane said in an email.

The four counts involved charges that an illegal betting ring related to CG Technology accepted wagers from “messenger bettors” at its race and sports books. Colbert worked at CG Technology’s race and sports book at the M Resort.

Paul Sexton, Robert Drexler and Thomas Ludford were messenger bettors for “high-volume wagerer” Gadoon Kyrollos, the complaint alleged. It said Kyrollos employed them to place bets for him with CG Technology.

Sexton placed some 4,464 wagers with CG Technology from July 2011 through Oct. 24, 2012, for a total of $22 million. Sexton has pleaded guilty to fourth-degree money laundering and has forfeited $600,000, according to the complaint.

Drexler placed approximately 1,612 wagers valued at $7.9 million, and Ludford made 900 wagers for $4.4 million, the complaint said. It contended CG Technology should have known they were messenger bettors on behalf of Kyrollos.

CG Technologies, in the settlement, admitted guilt to the other 14 allegations, which covered violations of state gaming regulations involving record-keeping. Gaming regulators said eight of 19 account wagering applications requested by the board’s audit division were missing.

The bookmaker also did not list Pascal Bartoli, supervisor at M Resort, and Michael Miller, book supervisor at M Resort, on the key employee report submitted to gaming regulators.

The complaint also alleged that on Oct. 1, 2010, Nicolas Jordan, a sports book writer, wrote 13 parimutuel tickets for himself while on duty at Cantor’s book at the M Resort, and Ryan Munoz, cashed a winning money line ticket on Oct. 7, 2010, while on duty at the M Resort.

The settlement tops the one handed down by control board more than 10 years ago. In 2003, MGM Mirage, now MGM Resorts International, paid a $5 million fine to settle a 92-count complaint that charged The Mirage with failing to file some 15,000 currency transaction records with the IRS over a two-year period.

Owners of the Stardust paid a $3 million fine in 1984 to settle a complaint over allegations that the now-imploded Strip casino’s former ownership failed to prevent mob-related skimming of gaming revenues.

In 1988, Ralph Engelstad, late owner of the Imperial Palace, was accused of damaging the state’s reputation for holding two Adolf Hitler birthday parties at the casino in separate years. He paid a $1.5 million fine.

The Palms paid a $1 million fine last year to settle a complaint resulting from an investigation that discovered rampant drug sales and prostitution at clubs on the property.

Founded in 1945, Cantor Fitzgerald is one of the largest private financial services firms on Wall Street. Lutnick, the firm’s chief executive, has led the company’s expansion over the past decade into investment banking, commercial real estate and gaming.

The company rebuilt itself after the attacks of Sept. 11, 2001, when hundreds of the firm’s employees died in the collapse of the north tower of the World Trade Center. Amaitis was running Cantor’s operations in London in 2001.

Cantor arrived in Las Vegas in 2009, promising to use its bond-trading platform to transform and grow the sports betting business.

On Jan 8, before the release of the complaint, Cantor Gaming said it was changing its corporate name to CG Technology, ahead of a proposed initial public offering though it offered no timeline for the IPO.

The company said the new identity reflects its position as “one of the world’s leaders in mobile casino gaming technology and race and sports book technology products and services.”

The company reports it has more than 30 percent of the Nevada sports wagering market and processes more than 50 percent of the technology-based wagers statewide. It has deals with eight Las Vegas casinos including The Cosmopolitan of Las Vegas, The Venetian and the Tropicana.

Contact reporter Chris Sieroty at or 702-477-3893. Follow @sierotyfeatures on Twitter. Contact reporter Howard Stutz at or 702-477-3871. Follow @howardstutz on Twitter.

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